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The big EU referendum debate - what does it all mean for UK farming?

The planned referendum on the UK’s membership of the EU has huge implications for farmers. So what has the industry got to gain or lose from leaving the EU? And what do farmers themselves think?


The big political picture

When will the referendum take place?


The EU Referendum Bill commits the UK to a referendum by the end of 2017. The Government appears to have ruled out a 2016 poll, leaving May or September 2017 as the most likely options.


What will the question be?


The question is likely to be along the lines of ‘Should the UK remain a member of the EU?’


What is David Cameron’s objective?


The Prime Minister’s objective is to renegotiate a better deal for the UK in the EU, put it to the public and persuade them to vote to remain in a reformed Europe.


It is a huge political gamble. If it goes well, he will feel he has finally resolved one of the UK’s longest running debates and left his mark on the nation when leaves Downing Street ahead of the 2020 General Election.


Lose the vote and he will probably leave office early, leaving behind a nation facing a new world of uncertainty or opportunity – depending on which side of the EU debate you stand.


What is he trying to renegotiate?


Mr Cameron has already begun the process of engaging with fellow EU leaders on his demands for EU reform.


He has met a number of leaders on a one-to-one basis and, on Thursday, formally set out his aims at a an EU summit in Brussels. He said he was ’delighted’ to get things ’properly under way’.


The Prime Minister has not formally revealed his hand, but areas he wants to make progress that could be of interest to farming include:

  • Allowing Britain to opt-out from an ‘ever-closer union’ of EU countries
  • Restricting access to benefits to EU migrants
  • Greater powers to national Parliaments to block EU legislation
  • Freeing business from red tape and ‘excessive interference’ from Brussels
  • Providing access to new markets with free-trade deals with America and Asia


What is the political climate at home?


Mr Cameron has plenty of support within his Government and his own party for his stance of staying in a reformed Europe. But being the Conservative Party, there are plenty of Eurosceptics, prominent among them former Defra Secretary Owen Paterson, who will make life difficult for him.


Labour and the Liberal Democrats will campaign to stay in Europe, while UKIP’s Nigel Farage wants to be at the forefront of the movement to leave Europe.


The SNP and Plaid Cymru are both pro-Europe and want it to be a requirement for the UK to only leave if all four nations of the UK all vote for an exit.


And in Europe?


While many EU leaders are more pre-occupied with issues like Greece and the future of Europe, the migrant crisis and terrorism, most, including German Chancellor Angela Merkel, want the UK to stay.


In the early days of negotiations they are at least listening to what Mr Cameron has to say. How much they will ultimately concede, however, will be another matter entirely.


What do the public think?

Four years go, more than half of Britons, 52 per cent, wanted the UK to leave Europe, compared with just 28 per cent who wanted to stay in.


The latest YouGov poll showed a very different picture with 45 per cent in favour of staying in, against 33 per cent who want to leave.


how would your business be affected if the UK left Europe?

What farmers think - FG Insight’s online survey 


Our online EU survey encapsulates the dilemmas facing farming faces when it comes to the big EU debate.


The headline figure is interesting, with 46 per cent wanting to stay in, compared with 28 per cent who want to leave.


Nearly one-in-four prefer to wait until the outcome of Prime Minister David Cameron’s renegotiation before making up their mind.


However, about three-quarters of respondents had no confidence Mr Cameron’s ability to secure changes in his renegotiation would benefit British farmers.


Please click on the graphs to view them.


In terms of the UK's future EU membership...

what is the best outcome for British Farmers?

In terms of the UK's future EU membership chart

Are you confident...

David Cameron could secure changes which would make life better for farmers before the referendum?

Are you confident chart

But it is when the survey bores down into detail when it is most revealing:

  • More than 60 per cent felt their business would benefit in terms of regulation if the UK cut its ties with Europe, compared with only 12 per cent who thought they would be worse off.
  • When it comes to Common Agricultural Policy and farm support, about seven-in-10 thought they would be worse off if we leave the EU, with nearly half saying their business would be much worse off.
  • Interestingly, one-in-five thought their businesses would be better off in terms of farm support if the UK left Europe.
  • Nearly half thought Brexit would harm their businesses when it comes to trade, against one-in-four who felt they would benefit.
  • On access to labour, nearly one-in-two feared their businesses would be worse off outside Europe, compared with just 17 per cent who thought they would be better off.

The survey confirms how farmers would relish freedom from Brussels’ sometimes restrictive regulation. But when this is weighed against the implications for farm support, trade and access to labour, many see benefits in being in, rather than out, of Europe.


149 people responded to our survey over the past few weeks.  

What can farming get out of the re-negotiation?

What can farming get out of the re-negotiation?

The first question for farmers in this debate is what the industry might have to gain or lose from David Cameron’s attempts to renegotiate the UK’s relationship with the EU.


Asked about this zt the recent Cereals Event, Farming Minister George Eustice initially highlighted the opportunity to reform the Common Agricultural Policy, although he acknowledged these negotiations would be separate to the EU negotiation.


“If we wanted to design an agricultural policy for the UK would it look like it  does now? I have never met anyone who has said it would. It is far from perfect and we want to try and re-design it,” he said.


Beyond, he said, there were gains to be had around the better regulation agenda, particularly the approach taken by EU auditors and the European Court of Justice, which he said were often guilty of ‘reinventing’ EU regulation to counter UK interests.


“Often the problem isn’t with the regulations themselves. All-too-often auditors come along and reinvent those regulations mean and the European Court of Justice puts a particular interpretation on those regulations that is then counter to our interests.


“It is not Defra doing the gold-plating, it is the EU regulators which do the gold-plating.”


NFU president Meurig Raymond said he would like to see a more science-based approach to decision-making in Brussels come out of the talks, particularly in areas such as crop protection and GM regulation.


But he warned against additional restrictions on migrant labour being imposed as a result of the re-negotiation, although Mr Eustice stressed the Prime Minister was seeking stricter rules on migrants' benefits, not the free movement of labour.


Tenant Farmers Association chief executive George Dunn highlighted opportunities to change rules on state aid and country of origin promotion and labelling, to enable AHDB could use levy funds more effectively for promotion.


"We could also do with some further freedom in implementing European Directives such as the Nitrates Directive which, for example, sets out a very prescriptive framework for the management of slurries and farm nutrients," he said.


"We need long-lasting derogations for the UK to take a different approach were the science dictates that the legislation is inappropriate.  This could cover other areas too."


NFU Scotland Parliamentary Officer Clare Slipper said Scottish farmers wanted to see changes to the 'compliance aspects that come with being a member of the EU', such as the 'burdensome' CAP greening rules.


Brexit - the implications for farmers

Brexit - the implications for farmers

Common Agricultural Policy

Like it or not, many farms in the UK still rely on the Common Agricultural Policy (CAP). In 2014, the UK’s total income from farming was nearly £5.4 billion – CAP payments accounted for nearly £3bn.


One of the big questions is what sort of support UK farmers would receive if we cut our ties with the EU.


UKIP has said it would replace the CAP with a modified UK Single Farm Payment scheme of £198/hectare (£80/acre) for lowland farms.


With the British taxpayer currently putting in £2 for every £1 received by farmers under the CAP, leaving the EU would spare the taxpayer billions, enabling the UK to ‘easily subsidise farmers’, UKIP agriculture spokesman Stuart Agnew said.


There are precedents in Europe. Figures from the Organisation for Economic Co-operation and Development showed Norway (63 per cent) and Switzerland (57 per cent) led the way globally in terms of farm support, as a proportion of gross farm receipts in 2012, compared with an EU figure of 19 per cent.


Few people believed, despite UKIP's stance, that any future UK Government would maintain public spending levels on farming.


Owen Paterson, one of the Conservative's leading Eurosceptic voices frequently spoke of his desire to see direct payments eliminated so farmers could be guided by the market in what they produce during his time as Defra Secretary. He also regularly expressed his frustration at the approach taken by the rest of Europe towards CAP support. 


SNP MEP Alyn Smith said farmers would be ‘at the tender mercies of Defra and the Treasury’ if the UK cut its ties with Europe.


He said: “They have consistently demonstrated UK policy is to cut agricultural spending, whether Labour or Tory Governments are in place.”


Conservative MP Neil Parish, new chairman of the Environment, Food and Rural Affairs Committee, also acknowledged UK farmers would not continue to receive the same level of support.


He warned they could end up with ‘the worst of all worlds’ if the UK leaves the EU as they would still be competing against EU imports, but with their EU competitors continuing to receive far higher subsidies, 


Commenting on the EU debate at the Cereals Event, Mr Raymond made it clear any significant reduction in CAP support would hurt farmers. He stressed the ongoing ‘importance of Pillar One support for farming, given the volatility in end-values of all commodities’.


Pressed on the implications for farm support of a Brexit, Farming Minister George Eustice said there were lots of countries ‘with successful agricultural policies not in the EU’.


“It is possible, but my preference is to stay in the EU, but a reformed one.”


NFU Scotland Parliamentary Officer Clare Slipper said without the ‘vital support’ of the CAP, many Scottish farms would no longer be viable.

Regulation and trade  

Freedom from burdensome EU regulation has long been one of the main attractions of the so-called Brexit.


UKIP has outlined how it would scrap the sheep EID rule, abolish ‘excessive and unnecessary’ environmental regulation and remove the Common Agricultural Policy’s restrictive practices, while allowing the UK Parliament a free vote on the cultivation of GM crops.


But others, including the TFA's George Dunn, said poor regulation cannot always be blamed on Brussels. “Much depends on how it is implemented,” said Mr Dunn.


Mr Smith said there was huge uncertainty over what Brexit would entail in terms of trade, making it very difficult to assess the implications.


“Are we talking about emulating Switzerland – or Norway and Iceland? Or something else entirely. None of the propositions have been articulated in any sorted of detail at all on an issue that is just not a priority for the vast majority of people on this island," he said. 


He said reforming UK regulation outside the EU would not be straightforward as agencies and non-Governmental organisations, such as Natural England and RSPB, would fight any major relaxations.


More significantly, any trade agreement with the EU would require UK exporters to comply with the regulations of the EU, he said.


Norway is not a member of the EU, but has a trading agreement with it as a member of the European Economic Area.


As Norway’s EU Minister Vidar Helgesen said recently in warning to the UK, this requires it to implement more than 10,000 EU legal acts, but it is not involved in EU negotiations about those rules.


Mr Smith said: “It would be perfectly possible for us to do a Norway and develop a domestic agricultural support system. But to judge Defra by its record I am not overly-convinced it would be much better in terms of red tape and regulation.


"And the idea that Norway is some model we could follow and is somehow independent of the EU in terms of agriculture is a delusion because, in order to import Norwegian products they need to meet exactly the same standards. EU rules like ID would continue to apply."

Trade agreements

Those who want to leave the EU have stressed there are big untapped markets beyond Europe.


Mr Paterson said he wanted the UK to remain part of a European free-trade zone, but gain political independence from the EU.


He told an audience in the US: “I think we have the most spectacular future outside the political and judicial arrangements [of the EU], embracing the trade, commercial and economic aspect.”


UKIP said it would seek continued access on free-trade terms to the EU’s single market, but also agreements with the 40 nations which have trade agreements with the EU and ‘other nations of interest to us’.


Mr Eustice highlighted, as one his reasons for wanting to stay in a reformed EU, the importance of access to the single market and customs union for British business, especially agriculture, a point reinforced by industry leaders.


Mr Raymond highlighted the importance continued access to the single market for the red meat sector, in particular, and said it was vital this was not jeopardised as the EU debate unfolds.


Mr Dunn said ‘continuing access to the EU market without penalty’ was vital whether we are in or out of the EU and stressed the need for country of origin labelling to underpin trade.


CLA president Henry Robinson said: “UK businesses must not be at a trading disadvantage to EU competitors. This means having trade links which work and a fair approach to regulatory compliance.”


While details of a possible UK exit from the EU are unknown, it is likely to come with restrictions on movement of labour.


Mr Raymond said this could be a big issue: “Without free movement of labour, some of our horticulture businesses in particular will struggle in the harvest season and with packing.”


This point was reinforced by the NFU's horticulture Guy Poskitt at a recent meeting of the NFU council who stressed how reliant the industry was on EU labour.


Mr Dunn said migration had provided an important source of labour to the agricultural industry and the ability to attract labour in this way needs to be retained.

The EU debate - industry views

TFA chief executive George Dunn

“The TFA will not be taking a position on the referendum unless the Government is able to provide a clear position on what it will do to replace the beneficial aspects of EU membership.”


CLA president Henry Robinson

“It will be for each CLA member to decide how to vote in a referendum when the time comes. Our priority is to ensure businesses operate in a fiscal and regulatory framework that provides confidence and certainty so as to encourage investment and growth. This has to be the case whatever the outcome of a referendum.”


NFUS Parliamentary Officer Clare Slipper

“Both sides will have to put forward their arguments so that NFU Scotland can consult with its members in greater depth. However, NFUS would stress that currently, the case is in favour of being part of the EU.”


NFU head of Parliamentary Affairs Matt Ware

“We want to have a grown-up in-depth factual debate on all the issues, including the future of farm support, the issues around migration the true value of trade both ways and the cost of what we would have to do if we left the EU.”


Farmers Union of Wales 

“We shares many of the frustrations of those who believe radical change is needed in order to address the unnecessary bureaucracy and rules which emanate from Brussels. However, we also recognise the value of remaining a part of one of the largest common markets and trading blocks in the world.”

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